{"id":13032,"date":"2022-11-21T16:28:46","date_gmt":"2022-11-21T18:28:46","guid":{"rendered":"https:\/\/speedqueencommercial.com\/en-us\/?p=13032"},"modified":"2023-09-15T06:51:51","modified_gmt":"2023-09-15T11:51:51","slug":"reap-tax-benefits-by-upgrading-your-laundry-before-the-end-of-the-year","status":"publish","type":"post","link":"https:\/\/staging.speedqueencommercial.com\/en-us\/news\/reap-tax-benefits-by-upgrading-your-laundry-before-the-end-of-the-year\/","title":{"rendered":"Reap tax benefits by upgrading your laundry before the end of the year"},"content":{"rendered":"

Upgrading your laundromat isn\u2019t just a good business decision. It\u2019s also a timely one, due to current tax benefits.<\/span>\u00a0<\/span><\/p>\n

Bonus depreciation<\/span><\/a>, an accounting method that encourage businesses to invest in new equipment, gives businesses a tax break on the purchase price of that equipment, allowing owners to immediately write off a percentage of the cost, rather than writing them off over their \u201cuseful life.\u201d<\/span>\u00a0<\/span><\/p>\n

Though the rules can change yearly, bonus depreciation is currently available for both new and used equipment, <\/span>Investopedia<\/span><\/a> reports. However, the amount you can write off depends on the type of asset.\u00a0<\/span>\u00a0<\/span><\/p>\n

Tax Cuts and Jobs Act<\/span><\/b>
\nEnacted in 2018, the Tax Cuts and Jobs Act increased first-year bonus depreciation to 100 percent through the end of 2022. However, the deduction will phase out, dropping to 80 percent in 2023, 60 percent in 2024, 40 percent in 2025 and 20 percent in 2026. After 2026, the deduction will no longer be available since bonus depreciation was enacted only as a short-term incentive for small businesses to spur investment that they otherwise might delay.\u00a0<\/span>\u00a0<\/span><\/p>\n

The tax savings from the deduction will depend on the taxpayer\u2019s income tax bracket and individual financial circumstances, according to <\/span>Shared Economy Tax<\/span><\/a>, a tax firm specializing in 1099 independent contractors. However, the savings can be significant.<\/span>\u00a0<\/span><\/p>\n

Bonus depreciation qualifications<\/span><\/b>
\nTo take advantage of bonus depreciation, businesses must meet certain requirements:<\/span>\u00a0<\/span><\/p>\n

    \n
  1. The asset must be placed in service by the business<\/span><\/i>. If you order new equipment this year, but the equipment is not in service until next year, you would not be eligible for bonus depreciation until 2023.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n
      \n
    1. The asset must be new to the taxpayer, but the asset doesn\u2019t have to be new<\/span><\/i>. For instance, if you purchase used furniture for your laundromat, the asset would be new to you and still qualify for bonus depreciation.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n
        \n
      1. Bonus depreciation can only be used on assets that typically use MACRS with less than 20-year schedules.<\/span><\/i> Under the <\/span>Modified Accelerated Cost Recovery System<\/span><\/a>, the capitalized cost of property is recovered over a specified life by annual deductions for depreciation. This includes all machinery, equipment, land improvements and furniture.\u00a0<\/span>\u00a0<\/span><\/li>\n<\/ol>\n

        What to do now to take advantage of bonus depreciation<\/span><\/b>\u00a0<\/span><\/p>\n

          \n
        1. Make large purchases before the end of the year, making sure equipment can also be installed and in service before Jan. 1.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n
            \n
          1. Claim bonus depreciation on your tax return. When creating your 2022 depreciation schedule, make sure you label the assets as being eligible for bonus depreciation. This means that the assets have less than 20-year lifespans, are indicated as new to you, and are not electing <\/span>Section 179<\/span><\/a>. [Section 179 allows small businesses to expense the purchase price of assets in the first year the asset is in service. It also allows for additional flexibility since you can decide how much Section 179 expenses you want to take in the first year.]<\/span>\u00a0<\/span><\/li>\n<\/ol>\n
              \n
            1. Consider accelerating asset purchase timelines. You could see substantial tax savings by moving planned future purchases forward 1-2 years before bonus depreciation lapses.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n

              So if you\u2019re thinking of upgrading your equipment soon, now may be the right time. Not only will you save money on taxes, but you\u2019ll also see lower utility bills thanks to more efficient equipment, as well as a greater return on investment thanks to additional premium cycles.\u00a0<\/span>\u00a0<\/span><\/p>\n

              This Section 179 calculator<\/span><\/a> can give you a general idea of your potential benefit. For more information about bonus depreciation, talk to your accountant or financial adviser.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

              Upgrading your laundromat isn\u2019t just a good business decision. 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